Here's how we done our successful greenscreenin':

Bought us up some lime green fabric.

Stetched it flat as a board with thumbtacks.

Put one spot on it; should have been lit more evenly, but it worked fine with this test.

Put the puppet a good 6' away from the greenscreen.

Got us a good lookin' mid exposure.

Slapped the resulting .jpegs into After Effects CS3, as a .jpeg image sequence.

Went to 'keying', and fired up 'Keylight 1.2'. I think it's a plugin that Adobe bought and made standard. Works real good.

That was it. Dropped the green like a rock. Even keyed out thin, partially transparent strands of hair perfectly.